law school laavas

Stemming off a bit from the previous post, law school leaves its graduates with a shitload of debt. That is clear. Here is a great story provided by one of my lovely, lovely readers:

find it on the web here.

Divorcing Law Grads, Stressed Over $190K in Debt, Victims of 'Education Hoax'

Some time after he graduated from California Western law school in 1995, Joel Kellum married his law school sweetheart. The couple had $190,000 in student debt.

Kellum and his wife made $145,000 in loan payments, but they paid off only $21,000 in principal, Forbes magazine reports. The variable-interest rate debt, which leapt as high as 12 percent, was a major source of stress in their marriage, according to the couple, and they divorced last year. "Two people with this much debt just shouldn't be together," Kellum told Forbes.

The magazine uses the couple to support the thesis of its article. It calls the lawyers "victims of an unfolding education hoax on the middle class"—the myth that college and advanced degrees translate to a life of economic privilege.

The average law grad has $100,000 in student debt, according to the magazine. UCLA law professor Richard Sander says the problem can be compounded for African-American students, who are lured in to improve law school diversity rankings without being told that less than half will pass the bar. Schools also "goose employment statistics by temporarily hiring new grads and spotlighting kids who land top-paying jobs, while glossing over far-lower average incomes," the story says.

"There are a lot of aspects of selling education that are tinged with consumer fraud," Sander told the magazine. "There is a definite conspiracy to lead students down a primrose path."

Private loans can be more onerous than those funded by the government, the story says. Many lenders charge 10 percent loan origination fees and 18 percent variable interest rates that start to accrue as soon as the loan is funded. And student loans cannot be discharged in bankruptcy.

Many educators tout the statistic that college graduates will earn $1 million more than high school grads. The magazine examines the claim and says the statistic doesn't account for some facts.

First, the higher salary figure may reflect the fact that college graduates are smarter and work harder—characteristics that could boost salaries for such people even if they don't attend college. Second, the cost of a college degree has risen at twice the rate of inflation, coming to nearly $100,000 for a private school. Third, college students give up about $125,000 in pay for the four years they are in school.

The story cites a College Board study that found one in four college grads earns considerably less than the top quartile of high school grads.

One law school dean, Richard Matasar of New York Law School, says law schools are "exploiting" students who don't succeed in life, according to an account of his remarks at a recent program by TaxProf Blog.

Matasar said registrations for the law school admissions test are flat or below the norm for this year. "That's never happened in a downturn in the economy before," he said. "They're catching on. Maybe this thing they are doing is not so valuable. Maybe the chance at being in the top 10 percent [helpful in landing a good job] is not a good enough lottery shot in order to effectively spend $120,000 and see it blow up at the end of three years of law school."

To me this article really sums up one basic thing: you have GOT to pay more than your monthly payments/interest. The only way to really get out of debt is to start working on the principal. If you can only make your minimum payments, you will be paying 10 times what you really owe. The couple in the article made $145,000 worth of payments that paid off $21,000 in principal. HORRIBLE! The article tries to say they were duped into it. Well, I would have to say I disagree with that. No one is duped into $190,000 of debt. They might be too stupid to realize exactly how much $190,000 is and how long it will take to pay off and how much their interest rate is, but they were not DUPED into taking the loans. They decided they wanted to be lawyers and go to law school. Any law school tuition is online and very easy to find. I have (semi-recently) gone through the loan process and it is very obvious the amount you are applying for. No one fills out the loans for you, you do it yourself. No one filled out the loans for this couple, they signed their own death wish.

But I do like this article for other reasons. I like it because it shows the truth about the fallacy "all lawyers are rich." Law school is expensive and lawyers' salaries have not gone up in the same linear exponential line that law school tuition has. BF's family thinks we are rich because we are both lawyers. I want to look at them and say "you didn't help your son with college or law school AT ALL, how could we possibly be rich?" that is my issue, not yours. :) but still, many people think that lawyers, no matter who they are and what type of law they practice, are rich. Truth be told, there are many lawyers who are rich. But there are just as many people who aren't lawyers that are also rich. Being a lawyer isn't a degree to be wealthy.

I have plenty of friends who married someone they met in law school and combined their debt. It was a big decision for me to marry someone who had more debt than I did. I thought long and hard before I decided I wanted to marry BF (no, I didn't do my thinking while he was down on one knee). Taking on someone else's debt is a HUGE deal. You are tied to this person for life and their creditors can come after you to settle their debt. Although, if you get divorced like the above couple, then the other person's creditors cannot come after you anymore for their debt. There's a little law for ya'll. One of the reasons I thought marrying BF and thus combining our finances would be ok is because we TALKED about it. We talked about our debt, we talked about my concerns marrying someone who had a lot more debt that me, and we talked about how we would pay them off. I told BF that I felt uncomfortable making payments on his loans (after mine are gone). I didn't want all my hard earned cash to go to his debts. Although my views on this have changed slightly now that we are married and happy. We have worked out a system where I fund both our Roth IRAs for the year and pay off my own loans, and he pays as much as he can towards his loans. I am much more comfortable with this situation and it is still a win-win for him too because he gets a Roth IRA without having to divert money away from his loans.

I really believe that the people who don't talk about their debt and talk about their attack plan/repayment plan are at a disadvantage. If you just TALK about what you both want to do with repayment, it makes both your lives so much less stressful! Go out there and TALK, I say!